Good day. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aptiv Second Quarter 2019 Earnings Conference Call. (Operator Instructions)

Elena Rosman, Vice President of Investor Relations, you may begin your conference.

Thank you, Chris. Good morning, and thank you to everyone for joining Aptiv's Second Quarter 2019 Earnings Conference Call.

To follow along with today's presentation, our slides can be found at ir.aptiv.com. And consistent with prior calls, today's review of our actual and forecasted financials exclude restructuring and other special items and will address the continuing operations of Aptiv. A reconciliation between GAAP and non-GAAP measures for both our second quarter financials as well as our outlook for the third quarter and full year 2019 are included in the back of today's presentation and the earnings press release. Please see Slide 2 for a disclosure on forward-looking statements, which reflects Aptiv's current view of future financial performance, which may be materially different from our actual performance for reasons that we cite in our form 10-K and other SEC filings.

Joining us today will be Kevin Clark, Aptiv's President and CEO; and Joe Massaro, CFO and Senior Vice President. Kevin will provide a strategic update on the business, and then Joe will cover the financial results and our outlook for 2019 in more detail.

Thank you, Elena. Good morning, everyone. I'm going to begin by providing an overview of our second quarter highlights and then provide a perspective on the second half of the year. Joe will then take you through our second quarter financial results as well as our full year financial outlook in more detail.

Second quarter was in line with the guidance we provided back in May, while EBITDA, operating income and earnings per share were all above the high end of our guidance range, reflecting very strong operating performance even in a challenging macro environment.

Operating income and earnings per share totaled $405 million and $1.33, respectively, driven by volume growth, overhead cost reductions and very solid manufacturing and material performance.

Our portfolio of industry-leading advanced technologies led to another strong quarter of new customer awards totaling $5.5 billion, bringing the year-to-date total to just under $10 billion. To put it simply, it was another good quarter in a tough environment, further validating our portfolio of safe, green and connected technologies, flexible operating model and sustainable business strategy.

Moving to Slide 4. Given a weak macro environment, I'd like to provide a backdrop for our full year outlook, which remains unchanged.

Starting on the left. We now expect global vehicle production for the year to decline 4% versus our previous forecast of 3.5% driven by a 5% decline in automotive light vehicle production principally driven by further weakness in China, partially offset by a flat commercial vehicle market.

Foreign exchange continues to be a headwind as euro and renminbi exchange rates are weaker than the prior year. Higher commodity prices, principally specialty resins, remain a headwind as a result of tight supply conditions globally. And lastly, U.S.-China tariffs also continue to be a headwind, although we're aggressively working to remediate the impact on our results.

However, as I mentioned, our full year outlook for revenue, EBITDA and operating profit remains unchanged as a result of continued strong growth over market driven by both content per vehicle growth and market share gains; our balanced customer, regional and end market exposure; and incremental overhead cost reductions as well as a timing related to material and manufacturing productivity initiatives, all of which are gaining traction and translating into margin expansion in the second half of 2019.

In short, our strong performance in the second quarter gives us confidence in our full year outlook and our ability to execute in a challenging macro environment.

Turning to Slide 5. Second quarter new business bookings totaled $5.5 billion, highlighting our portfolio alignment to the safe, green and connected megatrends. In our Advanced Safety and User Experience segment, our expertise in central compute platforms and sensing and perception systems are helping us deliver smarter, safer and more integrated solutions both outside the vehicle with advanced active safety systems as well as in the cabin to enhance user experiences in the second quarter, active safety new business bookings totaled $1.4 billion, which puts us on track to exceed $4 billion in 2019.

Our Signal and Power Solutions segment had new business bookings totaling $3.7 billion during the quarter, including $1.9 billion of electrical distribution and $1.8 billion of Engineered Components bookings. Within those numbers, we booked over $350 million in high-voltage electrification awards, bringing the year-to-date total to roughly $800 million, and we're on track to meet or exceed last year's record of $2 billion.

Turning to our Advanced Safety and User Experience segment highlights on Slide 6. Second quarter revenues increased 8%, 13 points over market. The continued strong demand for active safety solutions drove product line revenue growth of 53%. And as expected, the roll-off of revenues tied to our Displays business contributed to a decline in our user experience product line revenues.

During the quarter, we were awarded the active safety system for the Jeep Grand Cherokee and Wagoneer nameplates, additions to our previously awarded satellite architecture programs with SVA, further underscoring our industry-leading position in advanced ADAS solutions.

Turning to Slide 7. Our unique ability to leverage our capabilities in both the brain and nervous system of the vehicle has perfectly positioned us to deliver the advanced architecture necessary to support the feature-rich, electrified and highly automated vehicles of the future. Smart Vehicle Architecture, or SVA, is an optimized and scalable architecture that lowers the total cost of ownership for the OEM while also unlocking the opportunity for new business models.

During our 2019 Investor Day in early June, we highlighted the 2 advanced development awards we received this year. And while customers are evolving their vehicle architecture road map at different speeds, we see many of them transitioning to more scalable systems, enabling full SVA in the future. Underscoring that point, we won 11 different domain controller platforms and recently were awarded the zone controller for (sic) [from] a premium European OEM, effectively representing our first power data center win. This award represents another step in the continued commercial validation of Aptiv's SVA approach as well as our unique ability to conceive, specify and deliver next-generation architecture solutions.

Turning to Slide 8. Our Signal and Power Solutions segment is focused on enabling the high-speed data and power distribution technologies that are required to support the advanced, safe, green and connected applications that our customers are demanding. Revenues increased 2% during the quarter, 7 points over market. High-voltage electrification revenues increased 67% while commercial vehicle and industrial revenues were up 36%.

During the quarter, we were awarded several new business wins, including the signal distribution on the new Tesla Model Y and the Model 3 launching in China; the low-voltage system for the Fiat 500 battery electric vehicle, recall that last quarter we won the high-voltage system as well; and a new electrified, large SUV platform in China with a premium OEM. These awards for both low- and high-voltage systems underscore our strength in optimizing electrical distribution for complex architectures as well as our ability to serve customers globally through consistent launch execution.

Turning to Slide 9. All of our global customers are aggressively working to electrify their vehicle lineups. Beginning on the left side, you can see the progression of CO2 emissions in Europe. Between 2010 and 2018, CO2 emissions declined at an average rate of 2% per year. However, to meet future targets, OEMs will need to reduce CO2 emissions by a much more aggressive 7% per year through 2021 and then sustained 5% annual reductions through 2030. These are challenging targets, and OEMs have been responding by aggressively accelerating their electrification technology road maps.

Moving to the right side of the slide, Aptiv's high-voltage new business bookings and revenue growth track the pace of deployment of our customers. Between now and 2022, OEMs are expected to launch roughly 45 new high-voltage platforms globally, spanning hundreds of nameplates, representing 13% of global vehicle production. Based on our $4.5 billion of new business bookings since 2016, high-voltage electrification is among our fastest-growing product lines with revenues expected to be over $1 billion in 2022, a 40% compounded growth rate over the period.

Turning to Slide 10. Continued above-market growth in our Signal and Power Solutions segment is partially the result of our focused diversification strategy, allowing us to expand our capabilities into the commercial vehicle and industrial markets, both organically and inorganically. Our non-auto revenues are approximately 14% of total sales today. That's up from just 6% in 2015 and are expected to reach 25% by 2025.

As previously highlighted, our acquisition of Winchester Interconnect provided us with a solid platform to build upon and execute our Engineered Components Group diversification strategy. As shown on the slide, the Winchester management team has been actively adding accretive connector bolt-ons with a number of other acquisitions in the pipeline.

In the last 12 months, Winchester acquired W-Technology, a supplier of rotatable connectors and precision machine components, strengthening our capabilities in the oil and gas space; and more recently Falmat, which specializes in ruggedized, mission-critical cables and assemblies, further expanding our industrial revenues.

Now consistent across these businesses is the high cost of product failure and the need to meet the challenging temperature, vibration and other design specifications. We are more confident than ever in Winchester's ability to serve as a platform for additional bolt-on opportunities in the engineered components space.

Before I turn it over to Joe, I'd like to take a minute to recap our 2019 Investor Day. For those of you who participated either live or via the video webcast, I hope you came away with an even better understanding of our business strategy, our advanced portfolio of full systems solutions and rigorous execution culture. For those of you who missed the event, the video replay remains available on our website for your review.

To summarize, we're focused on building a more predictable and sustainable business with robust downturn resiliency, better positioned to outperform in any macro environment. The ownership mindset means that we remain disciplined and focused on driving the successful execution of our strategy and continuing our track record of outperformance, the combination of which delivers significant value to our shareholders.

So with that, I'm going to hand the call over to Joe to take us through the second quarter results and outlook for 2019.

Starting with our second quarter revenue growth on Slide 12. Revenues of $3.6 billion were up 4% adjusted, totaling 9% growth over market as vehicle production declined 5% in the quarter. Excluding acquisitions, organic growth over market was 6%. As a reminder, KUM is now fully integrated and lapped itself at the end of the second quarter, while Winchester Interconnect will lap in the fourth quarter.

The strong launch volume and content gains we had in 2018 continue into 2019, helping to offset price of 1.6% in the quarter and the unfavorable impact of FX and commodities. From a regional perspective, we saw strong performance in every major region of the world despite lower vehicle production year-over-year.

North America revenues were up 1% adjusted with 3 points of growth over market. Excluding acquisitions, organic growth over market was down 1% driven by the previously discussed exit of the display audio product line and low passenger car volumes overall, partially offset by key launches in the quarter.

Europe revenues were up 7% adjusted with 13 points of growth over market driven by the uptick of several active safety and electrification programs.

And lastly, our China adjusted growth was negative 6%, significantly exceeding China vehicle production, resulting in growth over market of 10 points. Although China vehicle production was lower than our expectations, we continue to see strong growth across our key product lines. I will provide an update on our production outlook for the year shortly.

Turning to Slide 13. As Kevin indicated, second quarter EBITDA, operating income and EPS were all above the high end of guidance we provided back in May. EBITDA and operating income of $583 million and $405 million, respectively, reflected both impact of lower vehicle production, FX, commodity and tariff headwinds, partially offset by our cost savings and reduction actions as well as the positive benefit of volume growth.

Operating margin, adjusted for FX, commodities and tariffs, was 12.1%. Tariffs were a $6 million headwind year-over-year although favorable to guidance, reflecting both lower demand levels as well as some benefit from our tariff remediation actions.

Earnings per share of $1.33 was $0.19 above the midpoint of our guidance: $0.08 from higher operating income driven in part by traction on the cost savings and reduction actions noted earlier; $0.08 better on tax expense, inclusive of increasing benefits from the changes to our structural operating model. These benefits will be sustainable going forward, as I'll cover in a moment. Net below the line items were also slightly favorable.

Moving to the segments on the next slide. For the quarter, Advanced Safety and User Experience revenues grew 8% or 13 points over market driven by new launch volumes and robust growth in active safety, more than offsetting the planned roll-off of our display audio product line and the infotainment launch cadence in user experience.

Operating performance before the impact of higher mobility spend included higher engineering investments to support our strong backlog of new wins, particularly in active safety. As a result, we expect active safety revenues up 45% for the year with low, double-digit operating margins. Our mobility spend for the quarter totaled $48 million, and we remain on track to our target of approximately $180 million for the full year.

Turning to Signal and Power Solutions on Slide 15. Revenues were up 2% adjusted, totaling 7% growth over market. Excluding acquisitions, organic growth over market was 3% driven by strong, double-digit growth in our high-voltage electrification product line. EBITDA margin, adjusted for the dilutive impact of FX, commodities and tariffs, was 19.2%, up 20 basis points. Operating income margin on a comparable basis was 14.1%, down 50 basis points.

Given continued weak macros, Slide 16 provides an update of our global vehicle production assumptions underpinning our revenue outlook for the year. We saw vehicle production in the second quarter track our expectations overall, down 5% in total as Europe volumes were better than expected, offset by a weaker China. However, extended macro uncertainty, regulatory constraints and continued weak vehicle sales, particularly in China, have caused us to revise our vehicle production outlook slightly lower for the remainder of the year.

At a global level, we expect vehicle production to be down 2% in the third quarter and 4% for the full year versus our prior outlook of down 3.5% driven by a percent decline in automotive light vehicle production, partially offset by a flat commercial vehicle market.

From a regional perspective, we expect China production to decline 15% in the third quarter and 13% for the year. And while we continue to experience strong growth over market in China driven by double-digit growth in our key product areas, we are preparing for structurally lower industry volumes going forward and continue to take actions to adjust our cost structure in the region.

Turning to Europe, we continue to expect vehicle production to be flat in the third quarter and down 4% for the full year driven by lower customer demand and program launch delays.

Lastly, we see North American production largely unchanged from the prior guide.

Despite the challenging global market, we continue to expect our portfolio of safe, green and connected technologies and balanced regional, customer and industrial market mix to more than offset the automotive macros contributing to growth over market and every region. As a result, our growth above market rate for the year is slightly higher at up 9% to 10%, while our revenue outlook of $14.625 billion at the midpoint remains unchanged.

Turning to Slide 17. Third quarter revenue was expected in the range of $3.6 billion to $3.7 billion, up 8% at the midpoint or 10 points of growth over market. As I mentioned, that assumes global vehicle production down 2%, in addition to $1.12-euro and an RMB of 6.90.

Operating income and EPS are expected to be $425 million and $1.30 at the midpoint, respectively, and includes estimated tariffs of $16 million in the quarter.

Moving to the full year. No change in our 2019 outlook at the midpoint of our revenue, EBITDA and operating income. Revenues are expected to be in the range of $14.525 billion to $14.725 billion, up 5% to 6%. We continue to expect adjusted EBITDA and operating income to be $2.4 billion and $1.6 billion at the midpoint, respectively. And our outlook includes over $90 million of FX and commodity and $44 million of U.S.-China tariff headwinds for the full year.

In aggregate, we believe these are mostly short-term impacts that should improve as we head into 2020. And given the strength of our revenue growth and bookings pipeline, we continue to invest in our key technologies and capabilities.

EPS is now expected in the range of $5.05 to $5.15, $0.10 higher at the midpoint from prior guidance, reflecting our updated tax rate assumption of 12.5%.

Looking forward to 2020, we expect our tax rate to remain in the range of 12% to 13%, reflecting our relocation to Dublin and continued alignment of our structural operating model.

Operating cash flow is expected to be $1.65 billion with restructuring cash outflows in 2019 of $150 million and CapEx unchanged at roughly $800 million.

Turning to the next slide. We thought it'd be helpful to provide more detail on the full year outlook from a first half versus second half perspective.

Starting with the revenue walk in the left, second half revenue is expected in the range of $7.3 billion to $7.5 billion driven by incremental volume from new program launches and ramp-ups in active safety, engineered components and high-voltage electrification, partially offset by lower production volumes in the second half.

Moving to the walk on the right, we expect $920 million of second half operating income at the midpoint. Headwinds from FX, commodities and tariffs are offset by the benefits of volume growth and continued traction in our material and manufacturing performance initiatives that Kevin referenced earlier as well as the added benefits from our continued cost savings and reduction actions.

In summary, the strength of our revenue growth in the face of vehicle production declines underscores the strength of our product portfolio, while operational performance continues to reflect the benefits of remaining maniacal about our cost structure and our ability to self-fund investments and future growth.

With that, I'd like to hand the call back to Kevin for his closing remarks.

Our second quarter performance was further evidence of Aptiv's ability to drive sustained, above-market growth and deliver on our commitments despite a tough macro environment.

We're maintaining our outlook for 2019, which includes roughly 5% to 6% revenue growth, representing 9 to 10 points of growth over market. As Joe mentioned, our outlook for the second half of the year really reflects our balanced approach, investing in future growth while reaping the benefits of our lean cost structure and our flexible business model.

Now we believe we -- we believe our unique formula further differentiates Aptiv as a company capable of capitalizing on the key global Auto 2.0 megatrends while also building a more predictable and sustainable business with robust downturn resiliency better positioned to perform in any macro environment and continuously delivering value to our shareholders.

First question is really on your organic growth in the market. I think that got raised slightly. What's really driving that? Is that improved take rates? Is it driven by customer pull-through? Is it OEM choice? And then for the fourth quarter, can you just remind us how much in acquisitions is going to be rolled into that versus to your growth over your market forecast?

Yes. David, I'll -- let me -- why don't I take the acquisition question first and then I'll start with your -- the first question. Q4 will be very small. We closed on Winchester in mid-October. So if you think that business runs roughly $85 million or so a quarter, you're a fraction of that.

As it relates to the growth over market, I think it's really in the sort of in the product lines that we're talking about, and it's really across a number of regions, right? We continue to see strong growth in active safety. I would say that's a penetration as well as new launch discussion. High-voltage clearly, particularly in China, are really around launches and some of the new programs we have both on the -- both within the China locals as well as the multinationals.

Okay. And was there something different that you've seen throughout the year that gave you the confidence to raise that? Or was it conservatism earlier in the year? Just wondering what you're seeing just again because you do have your global production coming down but the growth of the market going up and obviously revenue basically unchanged.

Yes. I would say that's just more the math as it's working out as we're pulling -- we're looking at customer schedules, who's up, who's down. We're seeing some pickup in that part of the business, active safety and electrification, relative to what's coming down. Remember, particularly in Signal and Power Solutions, with content on 1 out of every 3-1/2 vehicles, we've got a fair amount of market in that business, so it's really sort of the markets coming down while those product lines are sort of at or slightly above expectations.

Understood. All right. Then my follow-up is on the validation of your Smart Vehicle Architecture, the zone controller award. Is that a business you're able to win as a result of the 2 advanced development awards that you have in place? Is that the next step from a satellite architecture that you already have in place? Just trying to understand where to fit that in for the story as you continue to provide solutions for some OEM partners. But just wondering if it was the -- if it's the vision that you have for a re-architected vehicle long term that allowed you to win it or if it's just the next evolution of a program you're already on.

Yes. So now, David, it's with a completely separate OEM. So it's the next step in the evolution of Smart Vehicle Architecture. We think it's, again, further validation of the direction that the industry is headed in and what we're trying to drive, and we feel as though we're competitively well positioned. And we would expect -- as we referenced in our comments, 11 domain controllers plus the zone controller. You'll continue to see more awards in the future.

Well, it's a part -- it's a -- you should consider it's a part of the satellite architecture. It's what enables the various domain controllers to actually operate. So it's ultimately a part of the complete SVA solution.

So my first question is around the second half walk. Obviously, very strong ramp-up of margin expected between the first half and the second half. And the biggest bucket in your walk is obviously performance, 220 basis points. Could you give us a little bit more color on what actually goes in there? Anything that you could sort of dimension for us in terms of size of bucket? And from a high-level point of view, is that mainly a function of being able to catch up the costs to where the lower production is now as volumes stabilize?

Yes. It's Joe. Let me go through a bit here. So you're right, there certainly is a ramp-up. I think when we talk about performance, generally talking about manufacturing efficiencies, material savings, some of the cost savings obviously hit that line, but our cost savings also include sort of the other overhead categories as well as SG&A. So really, the bulk of that number is material and manufacturing performance and efficiencies.

A couple of things to think about. If you compare H1 to H2 at -- on its face, you're right, it's a significant step-up. If you remember from last year, we had about $65 million of inefficiencies in the back half from OE plant closures when they were sort of closing unexpectedly for a week or 2. That totaled about $65 million. So if you think about that our performance increase H1, H2 is a little over $200 million, about -- a little under $200 million, about $65 million of that is going to be sort of lapping that performance issues. We did about $90 million of performance in the first half. So if you look at that, we're sort of running at about $40 million higher, second half to first half, which is a step-up we're certainly going to have. And we have initiatives to achieve that number. We -- we're obviously going to work to accomplish it. But from our perspective, $40 million of additional performance in over a 6-month period is something that's within our capabilities to achieve.

Yes. And Emmanuel, I think if you look just historically, we tend to have more performance in the back half of the year, the second half of the year, material manufacturing, than in the first half. So there's also a natural cadence there.

Okay. That's helpful color. And then second question would be on your wiring business. One of your smaller competitors was essentially making noises around giving some fairly substantial price reductions and not too clear what the drivers are from the outside. And I'm just -- we're just curious from your perspective. Are you seeing a different competitive environment on the wiring or harness business? And if not overall, are the actions from one of your smaller competitors, can they have an impact on you?

Listen, I think based on -- Joe walked you through the reconciliation and gave you an update on price downs. So look, I think we ended the year -- or we ended the quarter, I'm sorry, roughly 1.6%. We're consistent in terms of our outlook that we'll be in the 1.5% to 2% range. You've -- we get this question asked pretty regularly, and you've heard our response with respect to the markets. We're in a challenging industry, and the pricing discussion is always a tough discussion. We would tell you the underlying environment really hasn't changed. I think each competitor, each supplier may have a different situation affecting price. But the overall market dynamics from a price standpoint are -- continue to be tough, just as they've always been.

As it relates can a competitor affect the overall market, I guess it's possible. But at the end of the day, you have to flawlessly execute and deliver on -- we'll launch 2,200 programs this year. And you have to flawlessly execute and deliver on those programs, and that's what tends to be the most important, that and the technology that you're bringing to bear to the customer. And we view our wins -- our major wins with customers like Tesla on a global basis to be validation of the value that we bring, the technology we bring to our operating execution.

And the only thing I'd add, Emmanuel, that -- there's competitors and there's competitors, right? Our competitors for us in that SPS business on the electrical distribution side are really the [UDAKIs] of the world. They are who we bump up against the most with Sumitomo a bit of a distant third. And that -- when you think about our business focused on KSK or VIN-specific builds, really large global platforms, complete electrical distribution systems, that -- I'd like to think -- I think I know who you're talking about, obviously. I'd like to think we're at a much different model than they are in terms of that type of business.

Just the first question on China. It does look like the growth of the market there in Q2 was a bit below the original guide. It does seem that you had that accelerating in the back half of the year. I was hoping you'd give us a little more color about the drivers there, perhaps program timing and so forth.

Yes, Itay, it's Kevin and Joe can comment. It's just program timing. So if you look at the back half of the year, you'll see continued strong -- an acceleration in growth partly due to incremental launches in the back half of the year versus the front half. But continued strong market outgrowth and absolute revenue growth in Q3 and Q4. So there's a little bit of movement there that we experienced in Q2. But have not seen any incremental retiming of programs or cancellation of programs at this point in time.

Great. That's helpful. And then a second question on Slide 18. I just want to make sure I'm interpreting it correctly. So the volume bucket and the production bucket, are you effectively saying that your backlog and content is going to be more accretive than the declines and pressure you'll see on the base business? Because some suppliers talk about the backlog coming in at a lower margin in the base business. Just curious how you're experiencing to that in the second half and even beyond.

Now the margin coming out of backlog, Itay, is consistent with what we expected and consistent with what we've historically seen. We've had somewhat higher decrementals in Q1 as production was coming down quick and we were adjusting sort of capacity and cost structures. Decrementals in Q2 were very much in line with that 25% to 30% that we've always guided to. So again, we're dealing with what I'll call sort of the cost structure on the capacity side. But when you look at the profitability of the business coming out of backlog, it's very consistent with where we thought it was going to be with the existing business and certainly haven't seen that impact.

But just to clarify in Slide 18, the difference between volume and production is -- is production what kind of base business and the volume ties to content in backlog or am I not reading that correctly?

Yes, production would be -- we try to make a difference between the market in production, just the vehicle production coming out again. SPS has the large part of market and then the incremental volume would be what I'll call sort of the growth over market. The content or I'd think of it more of growth over market. Obviously, content has a role to play there.

Yes. Just -- I want to just make sure I put in on one comment. If your question, ultimately, is when you look at the financial profile of the business that we're bringing on versus the financial profile of the business we currently have, the profile of the business we're bringing on at run rate is more profitable business than our existing business. So the dynamic profitability standpoint of the business have not changed. This is -- we reviewed with you at our Investor Day in June.

Wanted to actually just start with a question on your back half margins. And I know you're not giving 2020 guidance, but obviously, 12.5%, give or take, is pretty high. And I believe that your 20 -- that your 3-year outlook on margin was roughly 12.4%. So why wouldn't 12.5% be a fair starting point to go into 2020? Meaning, what are the things that maybe don't repeat into 2020 that you have in the back half of the year?

Well, as we've talked about, we've got programs in place to expand margins on an annual basis. We've often talked about margin in a particular quarter, it can be lumpy depending on time of year. I think the other thing is Q4 -- a lot of our material and manufacturing savings programs tend to be annual programs. We start with initiatives in the beginning of the year, build through them. And they tend to have greater level of benefit in the back half of the year. And then we sort of start over from a program and initiative perspective. So I think we're -- we remain confident in the margin expansion guidance we provided at Investor Day. But certainly wouldn't expect it to happen in 1 quarter and then hold for the subsequent years. There will be some fluctuations. Even with the volume changes, I think the other thing -- one of the things we focus on is preservation of OI dollars as well, just not necessarily the margin rates. So as we look to cost savings, how can we make sure we're preserving those dollars even in a tougher market.

Understood. And then, just on China, obviously, you're holding your margin despite weaker market outlook and just broader choppiness or volatility there. So -- and this is, I think, something we've seen for other suppliers where just the volatility in the launch schedule had maybe thrown off the margin. So what is it that you're able to do? And I know you talked to just being more vigilant on the cost structure in China, but what is it that you've been able to do that you're doing that's allowing you to maintain that profit or that margin despite that continued volatility especially in China around launches? And we know the importance of launches to your business and to your growth.

Yes. I think Joe goes through the numbers in detail. I think, first, Joe made the comment earlier with respect to our focus on absolute operating income dollars and commitments that we made. And as volume has declined in China, first and foremost, we've been way in front of it. We've reduced headcount in China in line with vehicle production declines and overlaid on top of it a number of initiatives from a material and manufacturing standpoint to offset the volume decline. We're able to do that because of our 14 entities there, some of which we wholly own, some of which are joint ventures. We have complete management control. So we drive the strategy, we drive the tactical decisions. And the team in China has done an excellent job reducing our cost structure. Joe made the comment about kind of coming to terms with kind of a new baseline from a vehicle production standpoint, making the -- taking the actions necessary to reposition the business for a lower level of vehicle production than what the industry had expected just a year or 2 ago. They've done a tremendous job. Joe can talk about what they've been able to do from our OI and OI margin standpoint.

Yes. I think, Dan, if you look at -- I mean, right now, within our forecast, we're expecting to hold effectively EBITDA and OI dollars in '19 consistent with -- flat with the dollars, not the margin rate, flat with 2018. And I think there's -- to Kevin's comments, obviously staying upon it, staying on top of it. I'd also -- and we've talked about this OI, right, we try to get ahead of it as much as we can. We certainly haven't been perfect in calling China vehicle production down. But I'd like to think we were out ahead of it. We were focused on Q4 of last year being lower than others expected. We've been trying to get ahead of it. So that -- our programs in China from a cost containment perspective started this time last year as we started to see the weakness in the back half. And again, we haven't called volume perfectly but I'd like to think we're almost as close as anybody at this point in terms of the market coming down. I mean, I think the other thing we talked a lot about at Investor Day was our focus going all the way back to 2016 on through cycle performance. We assumed we were going to this point at some -- at this point in the cycle sooner or later and wanted to be ready for it. So some of our overhead reductions, the cost reductions that we're talking about now, the basis for those started back in 2016, 2017. So I think being ahead of it and sort of assuming at some point it's going to happen has helped us stay ahead of it. We try to keep pace with it over the last couple of quarters as well.

If I can just toss in a quick follow-up to obviously a lot of sort of cost vigilance and focusing on maintaining the profits. To the extent you have a downturn in another region, and obviously, Europe is in the crosshairs, is it the same mentality there as well?

Listen. Again, as Joe used the word, you've heard us use it before, we're maniacal about our costs. We've reduced our corporate overhead by roughly 50%, or I think roughly $200 million plus over the last couple of years. And on top of that, very focused on how we operate from a manufacturing material and SG&A standpoint. So those are things that are in flight now. To the extent we need to make more aggressive course corrections in light of more significant downturns, those are things that we will do and we're positioned to do. But the organization is already focused on driving cost out. It's a part of our DNA.

Just to follow up on a question earlier about the profit pressures in a competitor's EE systems. The broader issue could very well be that there certainly are attractive growth over market categories and auto parts when most of which you're very active in active safety, infotainment, electrical distribution, signal processing and so forth. That's attracting competitors who want in on that growth. So the question is are there pockets of revenue in those categories that are less defensible in terms of the margin moats around those? And that as you kind of roll out 2 or 3 or 4 years, you would perhaps not aggressively seek renewal of that business? I'm thinking of some things that -- in wiring harness for example. And so how do we think about how you balance the ability to hold the mid-teens margins versus hold growth over markets?

Yes. Listen, at the end of the day, Brian, we're bottom line focused. And I think the point you make is a good point. I would tell you today I don't think there's any area that we operate that we would consider commodity-like, whether that be in vehicle architecture or that be in areas like active safety or user experience. Those are areas that we've decided to exit, including areas like displays that we --

The reception systems that we sold thermal. As it relates to specific vehicle architecture, I think Joe made the point. We don't do build-to-print sort of work. We're really about full body harnesses where we can work with OEs to optimize the full harness. A big portion of our business is KSK-related where we're actually building harnesses on a customized VIN number by VIN number basis, and that's really tough to do. I think there are players in the space who've tried to compete in those sort of areas, who had significant challenges competing and operating which has translated into issues with customers, which has translated into very low profitability and cash flow. And ultimately, I think what it translates to is the industry recognition of complexity. And again, customers most focused on liking price but most focused on service. And the ability to work with them to engineer out complexity and cost.

Brian, the only thing I'd add to that, and we often talk about the moat as it relates to active safety or the brain side of the business. There is a moat around that SPS business and it's in part driven by capabilities, global scale capability. Again, we're at a (inaudible) TE Connectivity, Amphenol level from a competitive perspective. To Kevin's point, that's KSK, big part of the business, global platforms. We're the only provider of full electrical distribution systems and some very large part of that business. A lower margin, lower cash flow competitor deciding they're going to somehow attain those capabilities in a typically short period of time is not something that we quite honestly foresee. We're very focused on competing with who we compete against and remaining competitive. But there is a set of capabilities in that SPS-based that would be hard for others to duplicate quickly.

Thanks. And sort of a separate but also forward-looking question around future business, any updates on nuTonomy in terms of just the pace towards Robotaxis? We've seen crews get more conservative about their timing, yet, at the same time, we've seen folks make a major investment in Argos. So kind of I guess 2 sub questions. One, pace of progress towards the Robotaxi business; and two, are you open to taking strategic partner money in that business or is that something you want to continue to own 100% of?

In terms of operationally, we now have vehicles on the road either testing or operating through the Lyft network, only in Las Vegas today, but operating now in Shanghai, Singapore, Germany, in Boston, Pittsburgh, in Las Vegas. The fleet in Vegas is part of a Lyft network. It's dozens of vehicles. I think we're up to 60,000 rides, 1.3 million miles. And I think roughly 55 or 60 hubs that ultimately deliver to 2,200 different locations in Las Vegas. So we continue to operate and operate very well and collect some revenue in a lot of learnings. With respect to Mobility on Demand and automated driving, listen, our view is we feel as though we've always been reasonably prudent and conservative that you'll start to see vehicles down the road in 2022, 2023 with meaningful revenues in 2025. Our current plan from a technology standpoint is to have a driver out of the car for testing purposes in 2020. So from an introduction standpoint, technology standpoint, our view hasn't changed. With respect to taking capital, listen, whatever makes the most sense from a financial return standpoint. As you know, we feel as though we have the capital today and the balance sheet to fund investment in the business. We're funding investment in the business to deliver on the timetables that we've talked about. To the extent it made sense to partner with someone strategically and financially, that's something that we'd consider doing.

Two questions. So the first, if we think about on a divisional basis versus plan, you've discussed sort of by the quarter. If we think about production, it got a little bit worse. But for SPS, you didn't have to change the guide. So can we just assume that the benefit is the outgrowth? And then obviously, the same question for [ASUE] (sic) [ASUEX] it seems like you brought the organic down by 2% to 3%. It's a little bit more than the production change. Is there a mix component? And just maybe just a little bit of color particularly on the change in the ASUE (sic) ASUEX , the outgrowth in the first half was actually pretty good.

Yes, on SPS, you're right, Chris, I mean it's the continued outgrowth coming from the product line, high-voltage, the connection systems business. HellermannTyton continues to have a good revenue growth year. On ASUEX, it's very platform driven. There's not a -- it's not really even a market, a particular region. It's very specific platforms. We did have a couple of OEs that have trimmed production but not take rates, not penetration of eventually true vehicle production that has given us a little bit of headwind from a sort of growth over market perspective. But I would say all of it is within what you would expect in this kind of market. There's no particular outlier, there's no product cancellations, there's no change in take rate, that type of thing, I think it's really just tweaking around production cycles and sort of launch volumes.

Perfect. Makes sense. And then, the second question, it totally makes sense the 12.4% margin in the second half, it's not an indication because of seasonality for 2020. But if we sort of dive in, maybe to [ASUE's] (sic) [ASUEX] margin, where sort of the implied, even if it's 7% plus for the full year, you're finally started to get a little bit of the pick up here. And I think you gave the detail on the mobility spend. It's annualizing almost $200 million. We're finally lapping some of this just pure investments so that we can get the incremental margin from active safety. Could you talk about, just over the next 12, 18 months, do we need to make another step level on mobility or can we start to finally think about whatever the revenue growth in that end market is that we could start to get your typical more 20%, 30% type incrementals because we finally lapped the investment in nuTonomy and mobility?

Yes, we've talked a couple times. Certainly, the significant step up, we don't foresee a significant step up in mobility spending into next year, right? So the $180 million, be $190 million, or $200 million. We're obviously starting the planning process and need to look at that. But it certainly wouldn't be what you saw from sort of a '17 or '18 type step up. So depending on sort of where you're calling the average, somewhere between $180 million to $200 million -- do we start to get consistent around that level? Yes, that's our view at the moment as we go through the plans and start the planning process. On underlying ASUEX margin or ASUEX margin x mobility, listen, the product lines particularly active safety, are delivering where we expected them to be at 10% in Q1. We're on track for what I'll call a low double-digit to -- sorry, high double-digit to low teens exit margin coming out of active safety this year from an exit perspective. Now what we are continuing to do is have opportunities in that business around pursuits, new business wins, those types of things. And as we have in the past, we'll be making decisions around investing in what we think makes sense. But certainly, in a product line perspective, we are seeing the margin develop as we expected.

Yes. Chris, I just want to echo Joe's comment. I think it's all about the near-term trade-off for margins versus the longer-term opportunities to widen the moat in active safety. I think that -- those are the trade-offs we'll have to consider. Obviously, additional programs need to drive incremental returns to the baseline business and incremental margin expansion. But you could get caught up a bit in that timing. And as you know, a number of these advanced active safety programs that we're talking about the scalable Level 1, Level 2+, Level 3-, that our global for global OEs are complex programs. But the opportunity to be awarded those programs and to be awarded at the right sort of margin rate and expand our competitive moat is something that we'll have to evaluate versus the near term investment resources to launch and develop those programs.

To be clear, I mean, essentially, if ADAS continues at this extremely high rate, 40% plus, essentially, the E of RD&E for ADAS will continue, so you'll get good incremental margins because you're lacking mobility, but it'll still be an investment period because the growth is there, particularly for the complex programs?

Yes, the RD&E will continue. I think the percent of revenue will vary a little bit on how much of that growth comes within existing OEs, how much is a cross is with new OEs, with new programs. And obviously, as a part of that process, we leverage to reuse as much software as much as the systems capabilities as we can on each program.

You guys have been real good on calling China production. And your second half production forecast are quite a bit below kind of other numbers that we've seen, basically about as bad as the first half. Are you guys seeing something in China that looks like kind of an incremental weakness in retail demand that would make the second half just as bad as the first even though the comps get a little bit easier?

Yes, I think from our perspective, Dan, I mean, near-term in China, although there's -- there can be some volatility, we're really operating off of the production schedules that we see today. And just a perception, a perspective based on out of the time we spent in China interacting with our management team that we're really not going to see a turnaround in the balance, from the balance of the year. That the government's not pushing really hard. There isn't a lot of consumer demand. That it's not really clear if the inventory shakeout has completely happened. And just facing a reality of what we think the China market looks like at this point in time. Joe, if you want to add anything to it...

No. Dan, I would say here, as we've talked before, our fundamental philosophy tends to be run rate until proven otherwise on some of these vehicle production numbers. And when you look at -- to us, Q3 looks a lot like Q2 with some launch activities starting late Q3 into Q4 that should help a little bit. But there's just -- to Kevin's point, we're not seeing a lot of reason for change at the moment.

Okay, got it. And just following up on that, looking towards kind of 6 pretty bad quarters in a row in China, can you give us an update on the health of the Tier 2 supply chain there? Some of the customers? Are you seeing any stress in China or if you've noticed anything globally? If you can just give us an update on the health of the Tier 2 network.

Yes. Listen, I think, from a Tier 2 network standpoint, it's something we watch very, very, very constantly. Maybe there's been some incremental pressure with some of the smaller local players, but we have at least minimal exposure. From a customer standpoint, roughly 75% of our revenues are with the multinational JVs. And then the balance with the top 5 or 10 local OEs, so again, it's something we watch closely from an exposure standpoint, but we haven't seen any real change from a risk profile or how people are acting. So -- but it's something that we're watching very closely.

The first question, Kevin, Joe, you guys were, I think, one of the first certainly in the earlier side to sort of talk about some of the slower ramps of launches in Europe. And I think China and we've obviously seen other companies sort of talk about that since then. Any update from what you saw sort of last quarter or to this quarter as we go forward?

Yes, nothing really meaningful at this point in time since our conversations in May, since the earnings call in May. Nothing meaningful at that point. A little bit of shifting on small, very small programs in China. But nothing that we would raise to your attention at this point.

Okay. And then, I guess just 2, I guess, maybe sort of clarification or housekeeping. But one, on the commodity FX, I think you were sort of pointing to like $110 million hit to EBITDA. And I think that was about $80 million prior. Is some of that because of copper coming down and that sort of pass-through? And is that actually helping your margins a little bit?

Yes. Joe, copper doesn't really hit the OI. It's just really that margin rate optics because it's a pass-through, it's very minimal flow through. So last year, as copper ran up, you get margin rate optics going one way. This year, to the extent we're passing through lower price, you should get it the other way. But it's a capture in that adjustment for FX and commodities. It's all in that line.

Okay. And just lastly, it looks like you did maybe 3 quarters of the $450 million in buybacks for, that your guidance suggests thus far. But your free cash flow is generally more second-half weighted. So is there a little bit more opportunity there?

This is Aileen Smith on for John. First question on the Smart Vehicle Architecture, I think it's pretty clear you're seeing traction with OEM customers, with the advanced development awards, and then on top of that, the recent Zone Controller Award. As you look at the competitive landscape, is it fair to say you're well ahead of your competition on this front or are you seeing some fast following among some of your peers as you've been fairly successful in your awards?

Listen. I -- we think we're uniquely positioned. As we've talked about Aptiv in our product portfolio and capabilities, having capabilities both in the history and vehicle architecture as well as in the software side is unique. And bringing the whole -- the ability to bring the whole solution together is certainly unique. We would say there is no competitor out there that has that capability or can be competitive with us. We think we're driving mindshare in the industry. We first started talking about FCA, roughly, call it 2 plus years ago. I think there's a lot more dialogue about it now amongst OEMs and even the supply base. We have the 2 advanced development programs, the Zone Controller Award. We're dialogue with another roughly another dozen OEs about Smart Vehicle Architecture. So we feel like we're really leading the activity. But there are players out there, the strong German supply base that have experience in and around controllers that can certainly provide a portion of the Smart Vehicle Architecture. But they're not in a position to provide all of it. And that's why we're so aggressively pursuing it, just given, again, our unique capabilities and our resources we can bring to bear.

Okay, great. And just as a follow-up to that point you made, you've talked a lot about in the past your competitive advantage on connectors and specifically the print division that makes it pretty hard to displace incumbent suppliers. Do you work at the competitive landscape for SVA over time and the electrical architecture system as being similar in a way?

Listen. I think taking a step back, we think it's similar in a number of areas that ultimately lead to SVA. As Joe talked about competitive moat, driving a competitive moat in areas like advanced ADAS systems, in our view, ultimately leads to leverage in areas like SVA. And leveraging the competitive moat in and around user experience in combination with active safety ultimately leads to SVA. And having the capability in and around each one of those areas in a strong competitive position, #1 in active safety, obviously leading the charge on SVA puts us in a position. It's probably not exactly like engineered components where you have low cost and high cost to failure. The solutions are higher valued add but a high cost of failure. But we think there's a real benefit in having the first mover, being the first mover position.

Great. That's very helpful. And second question on the macro side. As you think about U.S., China tariffs and trade friction that may be much more structural than transitory, can you remind us how your footprint realignment actions to Korea and potentially some other countries are progressing? And could this be set up or pushed more aggressively in the event that trade tensions escalate?

Yes. I think from a tariff, we continue to make progress. We saw a little bit of help from, on the remediation side. In Q2, we were obviously up $6 million year-over-year on tariffs but below the guide by about $6 million. So that's, in part, lower volumes. Unfortunately, that's not the best way to avoid tariffs. We just had lower -- the tariff impact on things moving across the board, just less of it. But we did see some traction and remediation. The Korean plants in validation with customers, we'd expect that to be completed by the end of the third quarter for the most part. So certainly, tariff remediation for '19, we're working hard to do more. But it's probably more of a 2020 as we start to work that down with, particularly with the Korean manufacturing facility. So all is tracking according to our original plan. Again, we didn't wait to see if tariffs went away. We got right on it. Obviously, we'd like to do more in 2019 but certainly feel we're positioned well to eliminate a good portion of that $44 million going into 2020.

Yes. I think it's important, to Joe's point, he said this before, we don't view these as transitory. We view them as they're going to be in place for quite some time. So as Joe said, we've taken action as though they're permanent. From a supply chain, from sourcing, from a manufacturing standpoint and we'll continue to do that. And I would say, we're moving as fast as we can. One of the biggest issues, quite frankly, is customer validation of new manufacturing facilities and sources.

Just a follow up on SVA on a couple of things. You got a development award and the zone controller which looks like a step towards production on the SVA. But to take these development awards further along that they become production, is there validation of the technology you need to do? Is there the cost side to that equation? What stepping stone's there for that to turn into a production contract?

Yes, it's really all of the above, right? You're working with the OEM to validate the effectiveness of the technology, the efficiency of the technology, manufacturability. You got a commercial price, right, making sure that it makes economic sense. The benefit of it from our perspective is we have an OE who participates in the technology development and funds a portion of it, helps us validate our views and our underlying technology and ultimately, earn a position to define what ultimately goes into the vehicle, which means you ultimately have a hand in defining certain elements of the RFQ. So it's an important step.

And then as we look at how that evolution happens, is it going to be more zone controllers and then multiple zone controllers and then development and then the full SVA or do you think there's a couple of steps there that kind of learn and validate and then we jump right to there more quickly?

No. I think we said we expect SVA revenues in kind of 2022, 2023 to start. It's really a continued consolidation of controllers into domain controllers and then additional zone controller awards and then optimization from there. So I would say, David, it's kind of a 2-, maybe a 3-step process. And it varies by OE depending upon where they are in their vehicle lifecycle and vehicle architecture tech roadmap.

David, we've mentioned this before, but for us, the exciting part of the advanced development of programs, right, our active safety a multidomain controller business started much the same way with the zFAS advanced development program years before. So for us, this is a -- it's a positive sign, and that this is how, particularly the more sophisticated OEs, bring tech to market with these advanced development programs. So we've had that experience before in very similar domains, in very similar areas.

Two quick questions, please. On the 220 basis point improvement from performance you're expecting in the second half, can you sort of break that down where you're exactly getting that from, half-over-half? And then secondly, there's been some interesting comments you'd made on China. As you mentioned, you're sort of looking for some kind of stabilization there. But there are inventories still in the vehicle channel. There's uncertainty in the economy. So what's the confidence level that production actually stabilizes by the fourth quarter versus further declines?

Yes, this is Kevin. Maybe I'll answer the first question. Joe can respond to the second. Listen, as it relates to outlook for China, listen, I think we'd say it's an opaque situation. So visibility, inventory levels in China is challenging. And whether they're still inflated or not, I think, is a bit of a question and somewhat debatable. Near-term, we operate off of customer schedules. Longer-term, we operate off the discussion with customers to get a feel for what their plans are as well as new sources like [CAM] in China and IHS. We feel as though we've made -- taken a fairly conservative position and have balanced the risk and the opportunities in our current outlook. Is it possible that it could be worse? It is possible. We don't think it's likely and we think we've taken actions to get in front of the situation in the event it is a bit worse. On the flip side, we could be overly conservative on the fourth quarter and there could be some upside. Now we're not planning on it, we're not operating in that way. But based on our 25 years of experience in China, we feel as though we have the appropriate amount of conservatism built into our outlook.

Yes. Steven, I think it's a little bit of just definition of stabilization. We've got China down 15% in Q3, down 13% for the year, which is still a double-digit decline in Q4. So I -- again, it's, I guess, relative stabilization to maybe where it was in Q2 and Q3. But we still have it down fairly significantly. On your original question around performance and about H1 versus H2, I'd go back to sort of Emmanuel's question and the response. Obviously, when you look at it optically, the performance numbers, 8 big numbers the back half of the year, round numbers a little less than $200 million. Some of that, about $65 million, is off lapping the performance issues last year from the plant closures, the OE plant closures. If you recall, we started to get back half of last year into a cycle with the OEs that they were sort of adjusting inventories by closing plants for a week or 2. That got very hard for us from a offset perspective when -- versus longer-term schedule changes. That was about $65 million. So if you take that out, sort of take the comp, the year-over-year affecting that out, you're looking at about $130 million of performance, material manufacturing performance in the back half. We did $90 million in the first half. So you're actually right. It's $40 million higher. But our view, just given our initiatives tend to be back-end loaded, we've been working on this for a while, a $40 million increase over the next 6 months is not something -- it's a lot of work. We've got things to do. But it isn't something that we don't know how to do. It should be manageable with, in the initiatives we have going on.

I'll keep it quick as well. Just on the active safety bookings, could you provide some color on the mix of that ramp? How much is Level 1 versus Level 2 at this point? And is there any much Level 2+ ramp taking place also?

Yes, I don't have the Level 1 versus Level 2 right in front of us. A number of those programs, a significant number of those programs, David, are effectively scalable programs that scale to be anywhere between Level 1 and Level 2, Level 2+ actually. So I'd say the bulk of them kind of sit within that sort of a framework. Joe can comment on the assumptions related to revenue on Level 1 versus Level 2 or Level 2+.

Yes. David, I think just as you'd expect the way this technology is rolling out, right, the bulk of revenue today tends to be in a Level 1, Level 2 light, Level 2- type systems. It's what you see in the cars today, that's what we're producing today. To Kevin's point, if you look at the types of things we're booking, whether it's the PSA when the Ford went and some of the others, those tend to be the scalable systems where the OEs and ourselves have come to appreciate that the best and most cost-effective way to put this technology to vehicles is to have like-for-like systems across platforms and across levels of optionality. So you're not redesigning systems. Those tend to be what's in bookings at the moment for launches over the next couple of years.

Okay, great. Thanks. And just quickly on the same thing, looking at the engineering components which also ramped up in the quarter, anything to call out nonautomotive there? Or is that, at this point, we're still strictly mostly on the automotive side booking business?

No. Listen, I think our CV and industrial business continues to grow. We continue to book well. Our CV business is up 17% or 18% in the quarter and we continue to book to those levels. Our expectation is we finish 2019 at about 14% non-auto, so CV and industrial revenues. Not too long ago, if you go back a few years, that was at 5%. Go back even a couple of years before that, that was less than 2%. So that progress continues.

Can you talk about an acceleration in electrification OEMs need to meet more stringent emission centers? This might be a little bit of an obvious question but how do you think about managing the secular transition from ICE towards electric? And I know you have visibility from your programs. But if there is a steeper acceleration towards electric, are there any meaningful changes we need to make for this transition or is it mostly incremental?

No, it's mostly incremental. Listen, electrification is good for us, right? To the extent there's more powertrain electrification, It means there's more content within our signal power and solutions segment at higher margins. So it's something that is a positive. And from a overall, if your question is leading capacity and capability, that's something that actually can be easily done, whether it's in our existing facilities, depending on the amount of growth or in, the addition of -- additional manufacturing facilities. But today, we are of full high-voltage electrification portfolio that's very attractive, very competitive. And again, the more electrification, the better.

Yes. From our post -- post the powertrain spin, Aptiv -- Aptiv, we actually do not have a decremental CPV going from BEV to internal -- going from internal combustion to BEV. What we lose on, say, connectors on an engine itself are actually offset by the additional electrical content of whole BEVs. So from a content per vehicle perspective, ICE to BEV is actually neutral to slight positive for us.

Okay, great. And then, can you talk about on the AB side, new scenes and the sharing of AB data? The industry looks like it's kind of following suit with your data sharing strategies. Do you think this levels the playing field on the AB side? And does this help you reduce any R&D burdens for Aptiv?

No, listen, I think from our perspective, anything that accelerates the development of automated driving: one, makes the world safer; two, it makes the market bigger; three, virtually all the automated driving players who are out there are customers in some way, shape or form, whether it be perception systems, whether it be vehicle architecture, whether it be data. So it creates additional profit pools. So to the extent we can accelerate the development for ourselves as well as other players out there, we view it as a positive.